State coffers empty

Data from the General Accounting Office on the state budget deficit for the first 11 months of 2002 confirm that the government’s claim of a surplus is not based on fact. Yesterday’s official announcement shows that the January-December deficit was 7 billion euros, a figure not only double that of the previous year, but an indication of a serious deviation from the government’s program. According to the data presented, the size of the deficit is due to the low rate of increase in income (1.2 percent) compared to the impressive increase in expenditure, which is growing at a rate of 9.4 percent. Experts say this is due to the government’s inability to resist satisfying a number of demands for extra spending (on higher salaries, among other things) despite its proclamations to the contrary. Either the government does not want to bear the political cost of refusing these demands or a refusal would result in a social outcry, although this is something it should have thought of when drawing up the budget. Either way, the inflated deficit is a poor heritage from 2002, since 2003 is expected to be a year with heavy spending, not only due to the Olympic Games preparations but because the government will be under pressure to make handouts on the eve of an election year. Concern is mounting over the fact that the 2003 budget, originally projected to have a surplus, was later officially corrected. If the projected deficit of 0.9 percent proves to be a conservative estimate, as was the case in the first 11 months of 2002, little will remain of the gains from the austerity policy of recent years. This negative projection is due, as Kathimerini recently commented, not so much to the fact of the deficit itself as the quality of the expenditure that led to it. The higher deficit could, of course, be an indication of poor planning. But if it had been due to outlay on development, at least that would mean today’s debt would be translated into increased income tomorrow. Unfortunately, this is not the case. Inflexible costs (interest payments, salaries and insurance payments) account for 74.2 percent of budget expenditure, and in large measure for the increased deficit. Tomorrow’s gains (and payment of today’s debt) will not be made by a rise in the State’s income, but will require higher taxation, stricter austerity and further restrictions on social policy. The government, which appears to be in denial, ought to realize this and resist the temptation to improve its public image by mortgaging the future.